Gold Price Poised To Top $1,000

Chennai: Gold continued its glittering run last week, gaining 3 per cent and towards the weekend, it was almost in a galloping mood. Helping gold were factors such as the four-month high inflation witnessed by the US, fall of the dollar and fears that inflation may rise further.

Overall, the yellow metal has gained 16 per cent since the beginning of this year and along with it, silver has also had a good run. It ended near $20-an-ounce mark during the weekend.

Impending crisis

Analysts are unanimous in their view that gold is gravitating towards $1,000 and it may happen this month.

What has happened with last week’s upward momentum is that gold has now found a firm support between $953 and $961, after having closed at $974.50 for April delivery.

It has been reiterated time and again that the US economy, the interest rate cuts announced by the Fed besides pumping of currencies were all pointers to an impending crisis and therefore, gold was firmly headed towards $1,000. And going by the panic that gripped the US stock markets, there should be no surprise if that event takes place this week.

According to Anuj Goel, analyst with Kotak Commodity Services Ltd, the yellow metal is headed for $1,025-1,030 range. His view is that raging crude and the euro-dollar equation could take gold to further highs. But there is a word of caution in that the dollar-yen has broken the crucial support of 104.

Back home, the waiver of farmers’ bank loans and raising of the income tax limit, which could see extra money in the hands of the households, are factors that can trigger demand for the yellow metal, besides, of course, white goods.

Gold appetite is never satiated in India, where the precious metal is valued the most. But the moot point is how many would have the courage to buy at prices of over Rs 12,500 for 10 gram. Still, with the marriage season ahead and a couple of festivals coming up, there could be some purchases.

With returns from gold being much higher than those from stock markets, that should see interest in its investment also. Therein, lies a reason for some more demand, not to forget the upcoming harvest season. The bottomline is that gold will continue to retain its sheen.

For those interested in technicals, gold will face resistance near $981 and then after $1,000. Supports for it are first at $954 and then at $939.

Silver will follow gold and it could also top $20 this week. Resistance is seen at $20.10, support at $19.33 after it closed at $19.875 during the weekend.

Crude, which has also had a run to a record $103 a barrel last week, could see some cool-off effect but March, analysts say, is always a time when it historically rises. Coal is likely to rule firm, while metals could witness profit-taking.

Record Price For Glendale Tea

Kochi: An invoice of handmade specialty tea offered from Glenworth Estate Ltd from its Glendale estate in Coonoor fetched a record price of Rs 625 per kg at the Cochin Leaf Auction Sale No 8 on Thursday. The tea was auctioned by M/s J Thomas & Company and bought by Amit Tea Agency, Cochin for their principal M/s Premier Tea Limited, Calcutta. The invoice represented top quality specialty manufacture, a press release issued here has said.

P.S. Sundar reports from Coonoor: “The invoice represented top quality specialty manufacture,” said a spokesman of J. Thomas. Glendale launched last month its 100-gm “Heritage Handmade Tea Packets”, but had not fixed the price yet. It also launched 250-gm “Glendale Supreme BOP” packets for Rs 45, “Glendale Frost OP” for Rs 55 and “Glendale Aurea SFTGFOP” for Rs 75.

Minimum Export Price Of Non-Basmati May Be Hiked

New Delhi: In a move aimed at discouraging rice exports, the Centre plans to further raise the minimum export price (MEP) of non-basmati shipments. This comes even as the country’s rice production is said to have touched an all-time high of 94.08 million tonnes (mt), going by the Agriculture Ministry’s ‘second advance’ estimate for 2007-08 released on Thursday.

“There is a proposal to hike the MEP from the present $500 a tonne free-on-board (f.o.b.) level. The exact figure is to be decided, but it could even be in the $600-plus range,” highly placed sources told Business Line.

The Centre had originally banned all non-basmati rice exports with effect from October 9. However, following complaints from exporters, who represented that the ‘non-basmati’ category covered a whole gamut of premium varieties not procured for the public distribution system (PDS), the blanket ban was replaced by an MEP of $425 (Rs 17,000) a tonne f.o.b. from October 31. The latter was subsequently increased to $500 (Rs 20,000) a tonne effective from December 27.

Concern over availability

But with international prices shooting up, there is renewed official concern over exports undermining domestic rice availability. Since the start of the current calendar year, prices of 100 per cent Thai grade B rice have increased from $375 to over $450 a tonne f.o.b.

“The Government is particularly worried about exports of long-grain varieties such as PR-106, which are procured for the PDS and are currently being shipped out at $550-600 a tonne f.o.b. There is a market for Indian long-grain in countries such as Saudi Arabia, which has announced a subsidy of $250 a tonne on rice imports into the country,” the sources noted.

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According to them, since October, about 80,000 tonnes of PR-106 has been shipped out to Saudi Arabia and the figure could cross 200,000 tonnes by September. These are mainly taking place through the Kandla and Mundra ports. “With a $250 a tonne import subsidy, an MEP of $500 a tonne becomes meaningless. While Thai long-grain rice is selling cheaper at about $450 a tonne, there is a marked preference for Indian long-grain varieties in West Asia,” the sources added.

Premium varieties

But the problem in hiking the MEP further is that it could hit exports of ‘Ponni’, ‘Red Matta’ and other such premium non-basmati varieties that are not procured for the PDS. Further, these basically cater to niche overseas Indian markets in the US, West Asia, Malaysia and Singapore. ‘Ponni’ rice, for example, is currently going at $550-600 f.o.b.

“A fine balance will have to be struck between discouraging exports, while not hampering shipments of PDS non-compatible grain. But in an election year, the Government’s worries over inflation and domestic availability obviously override all other concerns. And neither does the market take the Agriculture Ministry’s claims of a record crop very seriously,” the sources pointed out.

Currently, basmati-grade varieties from India are quoting (per tonne cost & freight, West Asia) at $1,550 for traditional (CSR-30) par-boiled and $1,850-1,900 for traditional raw, while correspondingly ruling at $1,400-1,600 for Pusa Basmati-1 and Pusa-1121.

One-year-old aged raw Pusa-1121 is fetching up to $1,800 a tonne. Prices of Sharbati, too, are ruling between $850 and $950 a tonne, depending on whether the consignment is of par-boiled or raw.